On Thursday local time, President Trump signed an executive order establishing the 'reciprocal' tariff rates imposed on several countries and regions, with specific rates ranging from 10% to 41%.
The White House stated that Trump will maintain a global minimum tariff of 10%, while imported goods from countries with a trade surplus with the U.S. will face tariffs of 15% or higher.
Trump formally confirmed a series of tariff announcements made over the past month through letters and social media, clarifying the terms of negotiations with other countries, including the EU, UK, Japan, and South Korea, and announcing tariffs imposed on countries like India that have not reached trade agreements.
In Asian morning trading, the market reacted mildly, indicating that investors were not surprised by Trump's statement. The Canadian dollar and South African rand remained basically flat, the Thai baht fell slightly, and the Swiss franc edged lower.
The White House separately announced a list of import tariffs for a range of trading partners for whom trade agreements have not yet been finalized. Some of these tariffs were expected, such as a 25% tariff on goods exported to India. Others include a 39% tariff on Swiss goods and a 30% tariff on South African products. Thailand and Cambodia, which reportedly reached last-minute agreements, will face a 19% tariff.
A senior U.S. government official, who wished to remain anonymous, told reporters on Thursday that countries are divided into three categories: those with a trade deficit with the U.S. will face a tariff of 10%; those that have reached an agreement or have a moderate trade surplus with the U.S. will face tariffs of about 15%; and those that have not reached an agreement and have a large trade deficit with the U.S. will face even higher tariffs.
The official indicated that other details are still to be announced, including higher tariff rules for certain exports rerouted through third countries.
Trump has followed through on previous threats, raising the tariff on exports to Canada (one of America's largest trading partners) from 25% to 35% starting Friday. However, goods covered by the (USMCA) negotiated during his first term are not included. According to a briefing from the White House, goods rerouted to another country to evade the new tariffs will be subject to a 40% transshipment tax.
The White House stated that the increase in tariffs is a result of Canada’s 'continued inaction and retaliation.' Previously, Trump told reporters that Canadian Prime Minister Carney had proactively reached out before the August 1 tariff deadline, but no dialogue took place between the two. U.S. Commerce Secretary Ross had previously indicated that if Carney 'begins to take a more friendly approach and stops retaliatory actions,' Trump might reconsider the tariff policy.
The White House stated in a briefing: 'By imposing tariffs on countries with non-reciprocal trade practices, President Trump is encouraging manufacturing to return to America and protecting our industries.'
This statement was released just hours before the 'reciprocal' tariffs set by Trump were due to take effect, after he had twice postponed the implementation of the tariffs to allow time for negotiations. The lower 10% tariff will apply to many small and medium-sized economies—Trump is not very interested in negotiating with these countries.
